Listed real estate market outlook 2024

The world’s listed real estate markets ended 2023 on a positive note. The FTSE EPRA/Nareit Developed index, which tracks the performance of listed real estate companies in developed markets, bottomed out at the end of October, coinciding with the one-year peak in US 10-year Treasury yields (5%). At the end of December, the 10-year yield had fallen by more than 100 basis points to just under 4%. Falling interest rates accelerated the recovery in listed real estate company prices, with the FTSE EPRA/Nareit Developed index up 18% from its 2023 lowest in just two months. The total return for the year was +6% in euro terms. The UB Global REIT Fund also performed strongly, with a year-to-date return that was around 2 percentage points above the market return.

The previous year (2022) was a turbulent one for listed real estate companies, however, and over a two-year period, the FTSE EPRA/Nareit Developed index is still down 16%. The persistence of inflation took central bankers by surprise, with key central bank interest rates rising at an exceptionally fast pace in 2022, even in historical terms. This was poison for listed real estate companies and in fact, 2022 was the second worst year in the history of the FTSE EPRA/Nareit Developed index (with the 2008 year of the financial crisis being the worst).

Historical evidence suggests that listed real estate companies are indeed the beneficiaries when the interest rate cycle turns. According to data collected by the National Association of Real Estate Investment Trusts (Nareit), listed real estate companies are performing relatively better following the Fed’s tightening cycles. The listed market is predictive of real estate values in both bull and bear markets and returns have been higher than direct properties since the interest rate cycle reversal. Moreover, the data suggest that the listed real estate market also outperforms the general equity market over a 12-month horizon after the end of the period of monetary tightening.

The recent rapid recovery of listed real estate companies has been part of the normalisation of the market, as investor underweight in the sector has been comparable to the situation in 2008–2009. Operationally, most of the investments in our REIT funds have an advantage in an uncertain market environment, as these companies have a long history of real estate investment, high-quality portfolios and the ability to raise capital immediately. Indeed, growth opportunities have increased in recent months, with several listed real estate companies raising capital to finance development projects and acquisitions.

United Bankers' REIT-funds:

UB Asia REIT Plus Fund »

An Equity Fund investing in Real Estate Investment Trusts (REITs) in Asian and other Emerging Markets.

UB European REIT Fund »

Liquid and well-diversified portfolio of European real estate securities.

UB Global REIT Fund »

Suitable for a long-term investor who wants to invest in liquid and diversified real estate.

UB North America REIT Fund »

Invest in the real estate market in the United States, Canada and Mexico.

All our funds »

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The information presented is based on UB’s own estimates and sources considered reliable by UB. The information on which the conclusions are based may change quickly and UB Group may revise its market view without prior notice. No information obtained through this presentation should be construed as a solicitation to invest. When making investment decisions, readers should base their decisions on their own assessment of the investment and the risks involved, and to consider their personal goals and financial situation.

Investing in funds always involves financial risk. The value of an investment in a fund may go up or down and you may lose some or all of the capital invested. The past performance of a fund is not a guarantee of future performance and cannot be used to predict future returns. The target return set for a fund may not be achieved. The risks are set out in more detail in each fund’s key information document and in the fund prospectus. Before making an investment decision, investors should consult the fund’s key investor information document, fund prospectus, rules and price list, which are available on each fund’s website. The funds are managed by UB Fund Management Company Ltd. The portfolio management of the funds has been outsourced to UB Asset Management Ltd.